The housing market has remained a tough environment for prospective buyers, particularly first-timers. High home prices coupled with stubbornly elevated mortgage interest rates have created a significant barrier to entry.

As of August 21, the average 30-year fixed-rate mortgage sits at 6.58%, according to Freddie Mac. That’s flat from the week prior but slightly down from early summer, when rates hovered near 6.85%. The question many buyers are asking now: where are rates headed this fall?

What’s Driving Mortgage Rates?

Mortgage rates don’t move in lockstep with the Federal Reserve, but the Fed’s actions do matter. The central bank has held its benchmark rate steady through much of 2025, but its September meeting could finally bring a change.

Federal Reserve Chair Jerome Powell has recently hinted at a potential 0.25% rate cut, citing slowing employment data and persistent but cooling inflation. According to the CME Group’s FedWatch tool, markets are leaning toward expecting such a move.

Still, mortgage rates are more directly tied to the 10-year Treasury yield than the Fed’s short-term rate. As Rose Krieger, senior home loan officer at Churchill Mortgage, explains: “While many people assume they are closely connected, mortgage rates typically follow the bond market.”

What Experts Predict for Fall 2025

Most industry experts believe September’s decision won’t lead to an immediate dip in mortgage rates.

Sarah DeFlorio, VP of mortgage banking at William Raveis Mortgage, sees a Fed cut coming but notes it may already be “baked in” to current rates.

Shmuel Shayowitz, president of Approved Funding, expects little movement in September but anticipates more cuts later in the year, saying, “Certainly the last quarter of 2025, I’m assuming that we will see rates close to the 6% marker.”

Fannie Mae projections suggest rates will settle around 6.5% by year’s end, with further declines into 2026, potentially reaching 6.1%.

Why a Drop Could Shake Up the Market

If mortgage rates do approach—or dip below—6%, it could prove to be a turning point. “I do believe that 6% is a huge psychological barrier,” says Shayowitz. Crossing it may bring a wave of buyers back into the market, creating renewed competition for available homes.

While lower rates ease monthly payments and reduce lifetime borrowing costs, they also risk fueling higher demand—and by extension, higher prices. Buyers who wait may find themselves paying less interest but more for the home itself.

Whether rates rise or fall this fall depends on a mix of economic signals, Fed action, and bond market trends. For now, experts anticipate modest declines, with more meaningful drops possible later in the year.

If you’re looking to buy, the best approach is to control what you can: shop around for lenders, maintain strong credit, and stay informed. While you can’t predict rates with certainty, preparation can help you make the most of any opportunity the market provides.

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